Some consumers confused by electric rate offers

Oregon officials are encouraging residents to stay with The Northwest Ohio Aggregation Coalition (NOAC)’s chosen alternate electric supplier because it provides the best rate.

City Administrator Mike Beazley said at a recent council meeting that Mark Frye, president of Palmer Energy, and a consultant for NOAC, recently provided him with information regarding how to determine which supplier is best.

“Anytime you get into the subject of marketing offers of electricity, it gets murky,” said Beazley. “Mark, as an engineer, understands it better than anyone. He still communicates in a way most people can understand. We’ve been fielding a lot of calls as our residents have been getting solicitations from energy companies.”

Beazley and Law Director Paul Goldberg, who represents Oregon on the NOAC board, have “spent a lot of time talking to citizens about it,” said Beazley.

When residents call the city to ask questions about the solicitations, “we usually make it clear to them that this is our business choice,” said Beazley. “The aggregation has proven to be a reliable way to deal with in the long term.”

The coalition buys energy at bulk rates for its member communities to lower costs. It currently has agreements with FirstEnergy Solutions to provide electricity and Interstate Gas Supply (IGS) as the alternate natural gas supplier.

Residents can opt out of NOAC’s chosen supplier and pick one of their own.

Frye told The Press last week that annual savings to residents within the NOAC coalition are approximately $20 in the natural gas program, and between $25-$30 in the electric program.

Many consumers have received mailers from FirstEnergy Solutions’ that offers a seven year contract at a fixed rate of 6.99 cents per kilowatt hour to save money long term under the assumption that costs will rise during that period, said Frye. Those who think rates will not go up should stay with the current electric aggregation plan.

The vast majority of consumers, according to Frye, are already with NOAC. Residential consumers are currently receiving a 6 percent reduction in electricity bills.

“And that 6 percent reduction is substantially cheaper than what the 6.99 fixed price offer is from FirstEnergy Solutions,” said Frye.

Rates are expected to rise in the future, he said, but consumers need to consider different variables to determine which plan is right for them.

“The questions you need to ask yourself are, `How long am I willing to fix the rate - driven by how many years I expect to live in my home,’ and `Am I planning on moving?’” said Frye. The long term contract, he added, doesn’t guarantee any cost savings in the future.

“It just locks you into a price,” he said.

Frye said that price competition is heating up, which could drive costs down.

“There is much more price competition, more so now than when we originally transacted with FirstEnergy Solutions years ago, when there weren’t that many people wanting to play. That’s no longer the case. I believe there’s going to be a lot of additional competition, which will help hold prices down. That doesn’t necessarily guarantee that the seven year price isn’t going to save you money in the long term. I don’t think, for the vast majority of people, that it’s worth locking in and paying a premium that is assured today with the hopes of potentially saving dollars in the future. But every person needs to make their own decision,” he said.

He also urged the public to read the fine print in any contract, including whether there are any termination fees. Residents who sign the seven year contract with FirstEnergy Solutions would pay a $295 termination fee, he said.

“Any time a customer enters into a contract, they need to be cognizant of all the terms and conditions. Particularly when it comes to energy, look at the termination fee. If you move away, then the $295 penalty doesn’t apply. But if you move to another supplier three or four years later, then that fee would be initiated. So you need to realize that provision,” he said.

Besides Oregon, participating members of NOAC include Northwood, Lake Township, Toledo, Maumee, Perrysburg, Sylvania, Holland and most unincorporated areas of Lucas County,

Frye said NOAC has saved utility customers about $58 million since its inception over 10 years ago.

“It’s a substantive savings to the community,” he said.

He said consumers can research which utility companies offer the best deal. Most, however, don’t have the time to do that and count on NOAC to negotiate the lowest rate on their behalf.

“What we’ve seen over the years is that if they think they’re getting a reasonable deal, they don’t want to spend the time doing the research because someone is helping them do that. They’re not particularly interested in learning about the energy business,” he said.